5 Disputed Numbers That Explain Geopolitics

Vadim Ghirda—APRussia-backed separatist fighters stand next to self propelled 152 mm artillery pieces, part of a unit moved away from the front lines, in Yelenovka, near Donetsk, Ukraine, Feb. 26, 2015.

From Argentina’s economic woes to Iran’s nuclear timeline, statistics that are up for debate can tell us a lot about geopolitics.

Every world leader uses data for political purposes. But some take it a step further. Here are five disputed stats where the controversy itself sheds light on a deeper political question.

1. How many Russians are in Ukraine?

Estimates of Russian troops in Ukraine differ dramatically depending on which side of the border you’re standing on. (That is, if you can find the border—Russian-backed separatists continue to take territory in southeast Ukraine). Ukrainian President Poroshenko proclaimed last month that there are more than 9,000 Russian troops and 500 tanks and armored vehicles in his country. But Russia claims it isn’t that many—zero, to be exact. According to a spokesman for Putin, “there are no Russian tanks or army in Ukraine.” Other players split the difference: in August, a separatist leader claimed that 3,000 to 4,000 Russian citizen “volunteers” provided assistance to the rebels.

When Western leaders emphasize the threat posed by Iran’s nuclear program, there’s a recurring, essential question: How long would it take for Iran to produce enough weapons-grade uranium to build a bomb? Iran consistently downplays the threat: an Iranian source cited the ‘breakout time’ at a minimum of 18 months. But Washington believes it’s drastically shorter: about 2-3 months. There’s also fierce debate about how long that breakout time should be. In ongoing nuclear negotiations, the Obama administration wants to ensure it would take at least a year. But Israeli Prime Minister Benjamin Netanyahu wants to eliminate Iran’s ability to produce nuclear weapons altogether.

Last year, the International Monetary Fund projected that China’s economy was about to overtake the United States’ when measured on a purchasing power basis (a less common way of measuring GDP that takes exchange rates into account). China became the world’s largest trading nation back in 2012. But even China is pushing back against any perception that it’s on top: the state-run news agency Xinhua ran a piece in January titled “China denies being world’s No. 1 economy.” Beijing is careful to stress that it’s still very much a developing country, not yet wealthy enough to take on a lot of global responsibilities. They have a point. Despite relentless growth—last year’s economic output topped $10 trillion, more than five times higher than a decade before—China’s output per person is still nowhere near that of the U.S.

4. Just how valuable for Americans would the Trans-Pacific Partnership (TPP) be?

One of President Obama’s biggest foreign policy priorities before he leaves office is to ink the TPP, a trade agreement that includes a dozen countries that collectively account for 40% of world trade and roughly a third of global GDP. The administration is quick to point out the estimated economic benefits. According to John Kerry, “TPP could provide $77 billion a year in real income and support 650,000 new jobs in the U.S. alone.” But not everyone buys that jobs claim. The White House’s statistics come from a 2012 book by the Peterson Institute that didn’t provide a precise jobs estimate. The book’s author said he avoided doing so because, “like most trade economists, we don’t believe that trade agreements change the labor force in the long run.”

Argentina’s economic troubles are common knowledge. So is the government’s tendency to cast the numbers in a rosier light. The government claimed 30% growth in GDP from 2007 to 2012 (5.3% annual average rate), but a study last year claimed that GDP only grew half that much and the size of the economy was at least 12% smaller than official government estimates. Then there’s the issue of inflation. The government estimates 21% inflation for this year—but some private economists expect a rate of nearly 40%. Furthermore, the government’s official exchange rate doesn’t reflect reality: one U.S. dollar is officially worth about 8.7 pesos, yet the informal rate is as high as 13.

World

Voters everywhere sour on elected leaders over time. Even in countries where opposition parties are weak and divided, unpopular leaders can lose their political mojo surprisingly quickly–and nowhere is that clearer today than in four key Latin American countries.

Venezuela

In a nation that must import almost everything but crude oil, crashing oil prices make President Nicolás Maduro’s life even tougher. …

5 Reasons Brazil Is Getting Close to the Brink

Joedson Alves—ReutersBrazilian President Dilma Rousseff reacts during a breakfast meeting with the media at the Planalto Palace in Brasilia, Dec. 22, 2014.

The country is facing a perfect storm of negatives

Brazil is grappling with a lingering corruption scandal, colossal drought, and an unpopular president who is suffering the consequences. Here are five reasons the country’s prospects look increasingly grim:

Bleak economic outlookThe world’s seventh largest economy is off to a rough start in 2015. Within the first 10 days of February, Brazil’s Real lost a tenth of its value against the dollar. January saw the country’s inflation rate increase to 1.24% from 0.78% the previous month, the highest rate since February 2003. Brazil’s economy is hardly expected to grow this year: the IMF forecasts just a 0.3% increase in GDP for this major emerging market.

Water shortagesBrazil is suffering through a historic drought, making it likely that the government implements water and power rationing. In 2014, Sao Paulo suffered the worst drought in over 80 years; with peak rainy season now over, its main reservoir sits at 6% of capacity. Since hydropower accounts for some 70% of Brazil’s electricity, water shortages directly threaten the power sector too. A federal decision to withdraw fiscal subsidies from the power sector could raise utility prices by 40% this year.

Ominous hikes in poverty and public transportationBrazil’s middle class has grown dramatically since the turn of the century, now accounting for about half of the population. As it grew, extreme poverty fell; the number of people unable to afford enough calories to avoid malnutrition has declined by more than two-thirds since 2003, when the center left Worker’s Party took office. But in November, Brazil’s government announced the first annual rise in extreme poverty on its watch, with the ranks of the indigent growing by 371,000 between 2012 and 2013. Meanwhile, that bigger middle class has put bigger demands on public services. In 2013, hundreds of thousands turned out to protest bus fare increases and expenses surrounding the World Cup that took place the following year. Last month, the government announced bus and train fire hikes that are even higher than those from 2013—16.6% in Sao Paulo and 13.3% in Rio. And Brazil will host the Olympics next year.

Corruption isn’t going awayCampaigning for her re-election last year, President Dilma Rousseff touted the state-run oil company Petrobras for creating 74,000 new jobs. Yet, an ever-deepening corruption scandal has engulfed the company and the government. Prosecutors report at least $730 million in “suspicious payments” on Petrobras contracts; the former purchasing chief indicated that 3% of his division’s contracts were provided to Rousseff’s Worker’s Party and allies for personal use or campaign finance. According to federal prosecutors, there are 232 companies currently under investigation. In Brazil, endemic corruption is commonplace: bribery is an ingrained practice for those seeking licenses or currying favor with regulators. More than 20,000 government jobs are by appointment—compared to 5,500 in the United States—providing politicians with ammunition to reward allies or business partners.

President Rousseff takes the hitAdd up all these painful developments, and it’s no wonder that the tide has turned against Dilma Rousseff. Since narrowly winning reelection four months ago with 51.6% of the vote, her approval ratings have nearly halved. A recent poll revealed that the percentage of people who rated her performance as “excellent or good” declined from 42% to 23% in just three months; those who rated her presidential performance as “bad or terrible” spiked from 24% to 44%. Brazilians are losing faith in Dilma: 60% believe Rousseff lied more than she told the truth during her campaign, and 77% think Rousseff knew about the corruption at Petrobras, a company she used to run.

No matter how long the ceasefire lasts, both countries still have immense problems

After tense, all-night negotiations on Wednesday, European leaders reached a shaky deal with Russia for a ceasefire in Ukraine. That didn’t stop the violence, and many doubt a ceasefire can hold. Here are the five reasons showing that even if Russia has it bad, Ukraine has it worse:

1. Abysmal economics
The Russian economy nearly entered recession in 2014, with GDP growing just 0.6%. But in Ukraine, Russian aggression led to economic fallout of another magnitude: GDP shrank nearly 10%. Ukraine’s economic performance since the break-up of the Soviet Union demonstrates the cost of living in Russia’s shadow. In 1991, Ukraine and Poland’s economies were roughly the same size; Poland joined Europe, while Ukraine didn’t. By last year, Ukraine’s GDP was one third of Poland’s (and that gap is growing).

2. Shrinking territory
Ukraine’s loss is Russia’s gain. In March, Russia annexed all 10,400 square miles of Crimea, a land area larger than Massachusetts. Ukrainian officials assert that Russia and the separatists it backs control 7% of Ukraine’s terrain, encompassing one-fifth of Ukraine’s population. Donetsk and Luhansk, the areas of concentrated fighting, account for some 15% of Ukraine’s GDP and a third of its industrial output. Ukraine has good reason to be skeptical about the latest ceasefire talks. According to its Foreign Ministry spokesman, since the last ceasefire in September, separatists have seized over 500 square kilometers of new territory—or some eight-and-a-half Manhattans.

3. Pummeled currencies
In 2014, the Russian Ruble was the second-worst performing currency in the world, weakening 46% against the dollar. Ukraine’s Hryvnia finished first, hemorrhaging over half its value over the course of the year. So far in 2015, Ukraine’s currency is picking up right where it left off. After the government announced on February 5th that it would no longer prop up its currency, the Hryvnia fell 50% in 48 hours.

4. Massive displacement
Thanks to a tanking economy, surging sanctions, and growing animosity between the Kremlin and the West, foreigners are fleeing Russia. From January 2014 to January 2015, there was a 31% drop in the number of Germans in Russia, and even bigger drops in Americans (36%), Brits (38%), and Spaniards (41%). Overall, there were 417,000 fewer foreigners in Russia in January 2015 than the year before… but that excludes the people who fled to Russia to escape the war in Ukraine. Since the conflict began, 430,000 Ukrainians, the majority of them ethnic Russians, have sought some form of legal status in Russia. The conflict has killed more than 5,000 people and displaced some 1.5 million.

5. Endemic corruptionNeither society is healthy; a huge percentage of each population smokes (six out of ten Russian males smoke) and life expectancy remains at 70 (Russia) or under (Ukraine). The rot isn’t just physical, however. Transparency International ranks Russia 136th on the Corruption Perceptions index; Ukraine is 142nd. Between 2010 and 2014, officials were stealing an estimated one fifth of Ukraine’s national output each year (according to claims from officials in the general prosecutor’s office). The Ukrainian shadow economy is roughly 50% of GDP—one of the world’s largest percentages.

Europe’s Anti-Austerity Contagion

At the height of the euro-zone crisis in 2011–12, governments in Greece, Spain and other cash-strapped countries were given enormous bailouts in exchange for pledges to enact reforms and accept painful austerity. A few years later, progress has been made, but voters in those countries are growing tired of economic misery. …

China Is the Big Winner in the Conflict Between Russia and the West

Pablo Martinez Monsivais—APU.S. President Barack Obama and German Chancellor Angela Merkel during their joint news conference in the East Room of the White House in Washington on Feb. 9, 2015

A split between the U.S. and the E. U. underscores why the response to Ukraine will be so challenging

On Monday, U.S. President Barack Obama and German Chancellor Angela Merkel held a joint press conference to declare solidarity in their approach to the conflict in Ukraine. “Russian aggression has only reinforced the unity between the United States, Germany and other European allies,” intoned Obama.

Would it were so. Russian aggression in Ukraine and the ongoing debate on how to respond have put serious strain on the transatlantic alliance, a problem that’s becoming harder to hide.

At the recent Munich Security Conference, the two sides tried to downplay their divisions. U.S. Secretary of State John Kerry insisted that America and Europe differ over “tactics,” not strategy. But that’s not saying much. The two sides agree that Russia is the principal aggressor in a conflict that has killed more than 5,000 people and displaced 1.5 million more. They agree that Russia should give back Crimea and stop sending soldiers and weapons into the Donbass war zone. They agree that Russia must respect Ukraine’s sovereignty and its right to join European clubs.

But Russia has no intention of accepting any of those things, which makes “tactics” the whole ballgame. How to back Vladimir Putin down? That’s the fundamental impasse between the U.S. and Europe.

The question of the moment is whether to provide weapons to Ukraine. The Obama Administration, Britain and Canada are considering it. Some in Washington, like Arizona Senator John McCain, are pushing hard for it. Germany, now the strongest voice in European foreign policy, flatly opposes the idea.

This disagreement exposes a deeper conflict. The focal point of the U.S. approach is not to defend Ukraine, but to punish Russia. Washington can shrug off the economic impact of cratering relations with Moscow: in 2013, Russia was America’s 23rd largest trading partner, accounting for just 1% of America’s total trade. But Russia accounted for nearly 10% of the E.U.’s total trade that year, making it the E.U.’s third largest trading partner. With many European countries economically dependent on Russian energy and its support for certain sectors — banking, finance, agriculture and others — to punish Russia is to punish Europe too.

Obama appears reluctant to send weapons into Ukraine, but he does want to increase pressure on Putin. He fears that negotiations alone give the Russian leader time to further destabilize and bankrupt Ukraine’s government, and that sanctions should be intensified. Europe has so far maintained existing sanctions, but there are too many European governments deeply reluctant to impose new ones. Why accept damage to their own economies when they don’t believe Putin will change course?

In reality, neither negotiations nor sanctions will back Putin down, at least not soon enough to save Kiev enormous cost and pain. But as the assault on Ukraine intensifies and demand to do something boils over, America and Europe will likely begin to pursue separate plans. That’s bad news for both.

As U.S.-E.U. solidarity on Russia tactics splinters, who is the big winner? It’s not Putin. His prize for unwavering aggression is a broken Ukraine, a broken relationship with the West and a broken economy. Instead, it’s China that stands to gain. China disagrees with the broadest Western assumption — the need for a strong international response to Russian aggression in the first place. As Russia turns East, China will drive a harder bargain in their commercial relations while taking care to ensure that relations with America and Europe continue to expand. The tactics of playing both sides will work very well for China.

And given the growing transatlantic divide, better relations with China might be more important than ever.

5 Plunging Numbers That Explain the World This Week

From Greek bond rates to Indonesian approval numbers, these figures tell the story of an unstable world

With spiraling oil prices, crumbling economies, weakened leaders, and intensifying violence in Ukraine and the Middle East, we’re experiencing unusual volatility in markets and geopolitics. Here are five falling numbers that have broad-reaching implications.

1. Down to 1.38%

There’s a huge difference between the current Greek crisis and previous cycles of panic: today bond markets are treating the Greek economy as an isolated patient, swatting away notions of contagion risk to other periphery countries. The numbers tell the story. In the wake of the anti-austerity party Syriza’s victory in Greek elections last month, Spain’s 10-year yield fell to new record-breaking lows, closing at a staggering 1.38% at one point last week. That means Spain can borrow at better rates than the thriving United States. Compare that to Greece’s 10-year yield, which shot above 11% in the days after Syriza took office.

Expectations for Indonesia’s new president Joko Widodo were sky-high when he was elected last summer. (He even graced the cover of this publication in October with the headline “A New Hope.”) But his recent nominee for police chief is a former aide to party powerbroker and ex-president Megawati Sukarnoputri, raising concerns about her influence over the supposedly independent Joko. Just days after the announcement, police chief nominee was named as a suspect in a corruption probe. Joko’s decision to trim fuel subsidies in November was lauded by investors; after all, between 2009 and 2013, Indonesia spent more on such subsidies than it did on social welfare programs and infrastructure put together. But it’s no surprise that a hike in fuel prices didn’t go over as well with the general population. According to an opinion poll by LSI, Joko’s approval rating has dropped 30 points—from 72% in August to just 42% in January.

The price of Venezuelan oil collapsed from $96 in September to $38 last month. That’s not a good thing in a country where oil exports provide more than 95% of foreign exchange. Venezuela needs that hard currency—more than 70% of its consumer goods are imported. Things are getting bleaker. The International Monetary Fund predicts an economic contraction this year of as much as 7% of GDP. Inflation is over 60%. And an economic perk is coming under threat: Venezuelans enjoy the world’s cheapest gasoline, paying the heavily subsidized rate of roughly $0.06 per gallon. This provision costs the government more than $12 billion a year. In a recent speech, President Nicolas Maduro declared, “You can crucify me if you want, but there’s a need for us to go to a balanced price.” Given all the economic woes and the President’s tanking approval ratings, it’s definitely not the easiest time to rake back this subsidy.

With ISIS rampaging across Iraq and Syria—and Houthi rebels seizing the capital of Yemen and pushing that country into civil war—Saudi Arabia is accelerating its plans to wall itself off from volatile neighbors. In September, the Saudis began construction on a 600-mile wall along the border with Iraq. To the south, they are strengthening fortifications to keep unwanted visitors from breaching the 1,060-mile border with Yemen. Border guards told a CNN correspondent that in just the last three months, they have stopped 42,000 people from crossing a 500-mile section of the border. It’s not just about security—it’s also economic. As of 2013, Saudi citizens represented just 43% of the country’s workers—and only some 15% of the private sector—with the rest consisting of foreign workers. With youth unemployment at around 40% in Yemen, many try to cross in search of work. But even as the spending spree on security continues, the Saudi Kingdom is halting most of its financial aid for Yemen, fearful it could fall into Houthi hands. According to a Yemeni official, the Saudis recently refused to pay $500 million earmarked for military aid.

They’re the group of Russians best equipped to weather hard times, but that doesn’t mean they aren’t feeling the burn. In 2014, the 21 wealthiest people in Russia lost a combined $61 billion—a quarter of their net fortune. Those who aren’t losing money are removing it: 2014’s net outflows by companies and banks topped $150 billion. That’s more than double the 2013 figure, and shatters the old record from ’08, amidst the financial crisis. The IMF expects the Russian economy to contract 3.5% in 2015. At least Russians can express their dismay while drinking more affordable liquor: this week, Moscow passed a new measure cutting the minimum price of a bottle of vodka by 16%.

Europe’s Rough Ride

On Jan. 25, Greek voters reminded the world that Europe’s recovery from crisis remains unfinished by voting in the Euroskeptic party Syriza. Greece isn’t about to leave–or be shoved from–the euro zone. But the labor and budgetary reforms needed in countries like Greece, Italy and Spain to restore Europe’s economic vitality are far from complete. …

5 Facts About the Greek Elections

Panayiotis Tzamaros/NurPhoto/CorbisGreek Prime Minister and Syriza party leader Alexis Tsipras, at the Presidential palace during the swearing in ceremony of the new Greek Government, Athens, Jan. 27, 2015 .

The results of Sunday's elections in Greece pose major challenges to Europe

On Sunday, Greek elections ushered in a radical left-wing Syriza government in sweeping fashion: the party won 149 seats—two short of an absolute majority—on the back of its anti-establishment, anti-austerity platform. How dissatisfied are Greeks with the status quo? How does that compare with Germany, heading into tense negotiations over the southern European country’s debt? And where can Greece turn for support? Here are five facts that explain the situation.

1. Surging discontent

In 2010, Syriza was polling at 5%. In last weekend’s elections, they captured more than 36% of the vote. Meanwhile, Golden Dawn, an anti-immigration party with neo-Nazi associations, took third place with 6%. Perhaps a different poll best explains this surge in support for anti-establishment parties. In a Pew Research survey measuring economic attitudes, Greece came dead last among all countries polled: just 2% of Greeks think their economic situation is good. (Compare that to the 85% of Germans who are happy with their economy.)

Why so much frustration with the economy? Since the financial crisis struck in 2008, the Greek economy has shrunk by more than 25%. So have wages. The unemployment rate is over 25% too. Youth unemployment is double that, rising to 50.6% in October. (Compare that to 7.4% youth unemployment in Germany.)

When Greece inked a historic bailout worth $270 billion dollars, or some $25,000 per Greek citizen from the Troika—the International Monetary Fund, the European Commission and the European Central Bank—it came with a quid pro quo. The government has undertaken drastic cuts in government spending to try to balance the budget. Education funding has been decimated: over six years of austerity, the Ministry of Education’s budget has been slashed by more than 35%. The pain adds up: the University of Crete endured a budget cut of 75% in 2011, an additional 15% the following year—and a 23% cut is scheduled for this year. Syriza’s argument—that such cuts are a bad bet for Greece’s future and will undermine longer term growth—resonates with the broader Greek population.

With the numbers so bleak, it’s no wonder Greeks are leaving in droves. Migration outflows are up 300% compared to pre-crisis figures; roughly 2% of the population has left, some 200,000 people. Somewhat ironically, over half of these emigrants have headed for Britain—and for Germany. Since 2010, more than 4,000 Greek doctors have left the country for jobs abroad.

Greece has had a little help from a friend outside the EU. In 2013, Russia surpassed Germany to become Greece’s largest trading partner, with trade flows of $12.5 billion. Tourism is a huge part of the Greek economy, contributing over 16% of GDP—and Russia has been the fastest growing source of new visitors. In 2013, tourism revenues from Russia skyrocketed 42%. Of course, recent Western sanctions undermine this budding relationship—a weaker ruble means less tourism, and Russia’s EU food export ban hurts Greek fruit exporters. This could explain why new Greek Prime Minister Alexis Tsipras met with the Russian ambassador to Greece within hours of taking office—and publicly expressed his disapproval with new EU condemnations of Russia.

King Abdullah’s Death Shows Saudi Arabia’s Declining Clout

The death of Saudi Arabia’s King Abdullah has momentarily grabbed the world’s attention, but the real story is that his kingdom matters less than it used to

Ten years ago, the death of a Saudi king would have sent shock waves through Washington. Today, as the Kingdom recovers from the death of King Abdullah yesterday, Saudis don’t carry the same clout. In part, that’s because the U.S. is much less dependent on Middle Eastern oil than it was a few years ago, as U.S. companies have reinvented the way oil and natural gas is produced. Hydraulic fracturing has opened access to liquid energy deposits locked inside once-impenetrable rock formations, and breakthroughs in horizontal drilling methods have made the technology more profitable.

By the end of this decade, the United States is expected to produce almost half the crude oil it consumes. More than 80% of its oil will come from North or South America. By 2020, the United States could become the world’s largest oil producer, and by 2035 the country could be almost entirely self-sufficient in energy. Relations with the Saudis are no longer a crucial feature of U.S. foreign policy, and the surge in global supply, which has helped force oil prices lower in recent months, ensures that others are less concerned with the Saudis as well.

In addition, outsiders are not worried that King Abdullah’s death will make the Kingdom unstable. Newly-crowned King Salman is plenty popular, and other key players—Crown Prince Muqrin, National Guard head Prince Miteab, and Interior Minister Mohammed bin Nayef—have pragmatic working relations with the new king and with one another. The succession process will appear uneventful from the outside, but Salman will spend the next several months consolidating his authority and building a stable balance of power among factions within the family and across the government.

Another reason the Saudis matter less: They’re now bogged down in the region. Saudi worries that Iran can make mischief even under harsh sanctions only raises fears should a deal be made with the West later this year over its nuclear program, which would ease those sanctions, Tehran would only become a more troublesome rival. But even if there is no deal and sanctions are tightened, Iran will probably become more aggressive to demonstrate its defiance, creating new headaches along Saudi borders.

How will the Saudis manage its local security worries? Along the border with violence-plagued Iraq, the Saudis are actually building a 600-mile wall complete with five layers of fencing, watch towers, night-vision cameras and radar. Terrorist violence in neighboring Yemen and the fall of its government this week add to the Saudi’s sense that their country is under siege. They’re building a wall along Yemen’ s border as well. Fights with ISIS and al-Qaeda in the Arabian Peninsula will demand attention and money.

King Salman is 79, and he’s been central to Saudi policymaking for 50 years. One day soon, we’ll see generational change in the Saudi leadership. When that happens, we might see a fresh approach to the Kingdom’s two biggest problems: Its inability to build a dynamic, modern economy to harness the energies of Saudi Arabia’s millions of young people and its growing marginalization as an international political and economic force.